ARC-CO Reports Are Net Not Gross
A reader sent an email to us indicating our reports of ARC-CO payments on corn for his county in Iowa were not correct. This is a case where both of us are correct. Our reports that we issued this week showed the estimated ARC-CO payments for each county on a net basis. He was looking at the number and assuming they were on a gross payment per acre. Our preference is to provide the report on a net basis since we know that payments will only be made on the basis of 85% of base acres.
Therefore, when you read the report, we are showing the payment after the 15% reduction. As an example, assume a county has an Olympic yield average of 180 bushels. We times this by $5.29 to arrive at benchmark revenue of $952.20. Our maximum payment is 10% of this number or $95.22. Our reader was looking for that number. The number we showed is $80.94 (85% of $95.22).
We are hearing reports that Ag Secretary Vilsack will announce today a delay in the base acre reallocation and payment yield update to March 31, 2015. Based on our reports from farmers of less than 40% signed up at local FSA offices, we are not surprised by this.
Paul Neiffer, CPA
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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